Stock Market Roars Ahead to Record Highs : Dow Industrial Average Jumps 25.25 to 1,878.28; Trading Volume Increases

The stock market forged ahead today, setting record highs as the rally of the past three sessions continued.

The Dow Jones average of 30 industrials climbed 25.25 to 1,878.28, easily surpassing the previous record closing high of 1,855.90 reached on April 21.

In the last four sessions, the average has gained 103.11 points.

Advancing issues outnumbered declines by about three to two on the New York Stock Exchange.

Big Board volume totaled 159.59 million shares, against 121.16 million in the previous session. The NYSE’s composite index rose 1.01 to 141.72.

Analysts say the revival of the bull market in recent days has been spurred by a spreading belief that interest rates still have room to decline.

Henry Kaufman, economist at Salomon Bros., said today that he expected the Federal Reserve to stick with an expansionary monetary policy at least until late 1986.

Stocks got a further boost today from word of share repurchases by two companies that are components of the Dow Jones industrial average.

International Business Machines said late Tuesday that it would buy back up to 10 million of its own shares, on the belief that the stock was attractive at recent price levels. This morning, Philip Morris reported plans to buy back up to 2 million of its shares.

Bond prices were mixed in early trading after rising in the previous session for the third straight time.

The Treasury Department’s key 30-year bond fell about $5 for each $1,000 in face value and its yield rose to 7.42% from 7.40% late Tuesday. But the 20-year issue rose as much as $7.50 for each $1,000 in face amount.

Analysts said there were no clear cut explanations for the market’s diverse behavior, but several said optimism for more interest rate reductions helped bolster prices of some government securities.

Others speculated that profit taking was driving down prices in the long-term issues, some of which have risen by more than $20 for each $1,000 in face amount since late last week. Treasury bond prices rose again Tuesday following the three-day Memorial Day weekend.

Interest rates have been falling consistently for months, which makes fixed-income securities more valuable. But there is a growing view among private analysts that the Federal Reserve Board will be compelled to push interest rates still lower to stimulate the sluggish economy.

Some analysts speculate the economy will grow at a rate of between 2% and 2.5% for the remainder of this year, reflecting the persistently high foreign trade deficit, lethargic consumer spending and high levels of personal debt. The Reagan Administration is more optimistic, contending that economic growth this year will reach 4%.

In the secondary market for Treasury bonds, prices of short-term governments rose about 1/32 point, intermediate maturities rose about point and some long-term issues were up as much as 3/4 point.

Yields on three-month Treasury bills were up two basis points to 6.18%. A basis point is one-hundredth of a percentage point. Six-month bills rose four basis points to 6.26% and one-year bills were up one basis point at 6.27%.

The federal funds rate, the interest on overnight loans between banks, traded at 7%, down from 7.0625% late Tuesday.